Friday, March 26, 2010

Why Repeal May Be A Tough Sell

Republicans promised to repeal the recently enacted health insurance reforms. Then they promised to "Repeal and replace." Then, Sen. John Cornyn (R-TX) said the GOP is "not interested in repealing ... preexisting conditions." At this rate, soon the GOP will be taking credit for health insurance reform because of those 100+ GOP amendments in the final bill.

After the jump, why the GOP will have a hard time selling repeal.

Health insurance reform rests on a three-legged stool of regulations, subsidies and mandates.

The regulations are such things as forbidding insurance companies from denying coverage for pre-existing conditions or dropping coverage when their customers get sick or setting lifetime caps on coverage. Such consumer protections are as popular with the public as they are unpopular with insurance companies. Don't expect the GOP to mention them in the same sentence as the word "repeal."

The second leg of the stool, subsidies, makes it possible for all Americans to afford health care, either through expansion of Medicaid for the poor, or by closing the "doughnut hole" in Medicare, or through tax credits for the middle class who must buy their own insurance, or through tax credits for small businesses so they can afford to offer health insurance to their employees. Tax credits are popular, too, so don't expect the GOP to mention them in the same sentence as the word "repeal" either.

Republicans might have better luck with one of the methods used to finance the subsidies, namely tax hikes on households making over $250,000. Expect the GOP to make a big deal about repealing the tax hikes (leaving out the part about "over $250,000"). But repealing tax hikes won't repeal the reforms, only the means to pay for the reforms. That sticking point has never cost anyone votes in the past, however.

That leaves the mandates, which are widely unpopular. Sure, there are some who think that people who go without health insurance until they get sick or injured are ripping off the system. But many people (on the right) will just see the long arm of the government forcing them to open their wallets and buy something they do not want. Others (on the left), still upset they don't have a public option, will object to having to buy health insurance from the detested insurance companies. So, the GOP might very well win votes by promising to repeal the mandate that all Americans must buy health insurance.

But don't expect the GOP to act on this campaign promise if they regain power. Even though the electorate in general may be misinformed on the issues surrounding health insurance, the leaders of the political parties are not. The reason the Democrats included mandates in their plan is the same reason why the GOP's own plans from the 1970s to the 2000s also included mandates, most recently "RomneyCare" in Massachusetts. Because without mandates, the insurance system will get caught in a death spiral. The previously excluded sick will now join because the insurance companies can no longer turn them away. Unless the influx of the sick is balanced by bringing uninsured healthy citizens into the market, premiums would have to go up. That will drive more healthy people out of the market, driving up premiums even more. The insurance companies recognize that regulation without mandates is an unsustainable business model. Expect them to get the word to the GOP. The GOP might say in public they'll repeal the mandates, but in private they'll be telling the insurance companies not to worry.

All in all, the GOP will have trouble selling the public on wholesale repeal. And when they start chopping off individual legs of the health stool, they'll have trouble explaining how the stool won't fall over. So, expect the three-legged stool to continue standing, even after the GOP eventually regains power.

Richardson voters will get a first closeup look at the GOP campaign strategy March 29 when Rep. Pete Sessions (R-TX) holds a town hall meeting in Richardson.